Skip to content
SimpleERP

Glossary

What is a financial year?

Every business keeps its books for a 12-month year. Which months it covers depends on where you trade, and almost every deadline and invoice number follows it.

Updated

In short

A financial year is the 12-month period a business keeps its accounts and reports tax for. It starts on 1 January, 1 April or 1 July in most countries. SimpleERP sets it from your country and numbers documents by it.

A financial year, or fiscal year, is the 12-month period a business keeps its accounts and reports tax for. Many countries use the calendar year; others start in April or July. Statutory accounts, annual returns and most tax deadlines follow it, and many businesses restart invoice numbering each financial year so every number stays unique within its year.

Financial year: a worked example

The usual start of the financial year in the five countries SimpleERP sets up in most detail:

CountryFinancial yearFirst invoice of the year
United Arab Emirates1 January to 31 DecemberINV-2026-0001
United States1 January to 31 DecemberINV-2026-0001
United Kingdom1 April to 31 MarchINV-2026-27-0001
Australia1 July to 30 JuneINV-2026-27-0001
India1 April to 31 MarchINV-2026-27-0001
Defaults set from the country at sign-up; a business can pick a different start month before its first posting.

For Harbour Steel Furniture, a fictional business on a calendar year, a sale invoiced on 31 December 2026 is 2026 income even if the money arrives on 5 January 2027, because income is counted when it is invoiced, not when it is paid.

FAQ

Questions, answered

What is the difference between a financial year and a calendar year?

A calendar year always runs from 1 January to 31 December. A financial year is any 12-month period a business reports for. Where they match, as in many countries, the two are the same; elsewhere the financial year starts in another month, such as April or July.

Can a business choose its own financial year?

It depends on the country and the type of business. Some tax systems fix the year for everyone; others let a company pick its year end when it registers. Ask your accountant before you choose, because changing later is usually hard.

Do I have to restart invoice numbers each year?

Rarely by law, but numbers must stay unique and in sequence. Putting the year in the prefix, such as INV-2027-0001, is the common way to guarantee that and makes each year's series easy to check.

Do I need to close the books at year end?

You need to finish the year's entries, check stock and balances, and give your accountant the reports. Some software then needs closing entries to move profit into retained earnings; others carry it forward automatically. A lock date stops later changes to the closed year.

Run your whole business from one simple place.

Seven days free. No card. Your first invoice in minutes.